Chapter 5 high price of ownership

Why do we overestimate everything about ourselves? Why is the seller always higher than the buyer's estimate? Why are you unwilling to pay a high price for tickets that you can no longer buy? How did the "try it out" promotion hook you up? What the heck is "30 days full refund if you are not satisfied"? "Scalping" experiment At Duke University, basketball is considered somewhere between a fanatical hobby and a devout religious activity.The school's basketball gymnasium is small and old, and its sound-absorbing effect is also poor. During the game, the cheering shouts from the audience come one after another, mixed and reverberated, and become a giant thunderstorm, which is enough to make people's adrenaline surge.The small size of the arena naturally allows people to get in touch with the players, but there are not enough seats to accommodate the eager fans.But, having said that, this is what Duke people like; the school has no plans to renovate and expand the small and crowded basketball hall to make it bigger.A complex selection process has developed over the years to properly distribute tickets, separating the true die-hard fans from the general public.

Although the spring semester has not yet started, students who want to watch the game have already set up tents on the grass outside the basketball hall.Ten students live in each tent.Those who arrived first set up their tents at the nearest place to the entrance of the arena, and those who arrived later came in the rear.This growing group is called "Krzyszowski City", expressing the enthusiasm of the students for the team's victory in the new season and the coach "Uncle K" - Mike Krzyzes Visky's heartfelt love. So the whistle sounded from time to time. At this time, it was easy to know whether a person was a die-hard fan and whether the "blue blood" of an authentic Duke fan flowed in his veins.As soon as the whistle is sounded, the countdown begins. Within 5 minutes, at least one person in each tent must sign in with the basketball association.If no one registers in any tent within 5 minutes, the people in the whole tent will be eliminated and queue up again at the end.This process will continue until the end of the spring semester, reaching a fever pitch 48 hours before the start of the ball game.

48 hours before the game, "tent check-in" was changed to "individual registration".At this stage, the tent is no longer a whole, but simply a place to live together: when the whistle blows, everyone must go individually to register with the basketball association.If you miss a "personal registration", you will lose the qualification for this round and go back to the end to queue again.The siren sounds only once in a while during the normal game stage, but in the big game stage (such as the game against the University of North Carolina at Chapel Hill and during the national championship), the whistle can be heard 24 hours a day and night.

But that is not the most peculiar part of this ritualistic phenomenon.The most peculiar procedure is during really top-level events, such as the championship game of the national competition, when even the students at the top of the queue may not necessarily get tickets.Unlike normal events, each of them can only get one lottery number.After a period of time, they crowded in front of a winning ticket in the student center to find out who will win and who will finally get the tickets for the final. In the spring of 1994, I was walking on the Duke campus with Jeff Kamon, a professor of INSEAD Business School. When we passed the tent camp, we heard the sound of sirens.Everything in front of us touches us, isn't this a living experiment?Those students living in tents are eagerly looking forward to watching the basketball game.It was this special opportunity that they lived in tents for a long time.However, once the lottery is over, some people are happy and some people are sad-some people get the tickets, and others return without success.

The question was this: Do the students who got tickets value their tickets more than those who didn't?Although the latter has tried just as hard.We assumed that students who got tickets would value them more.Our assumption is that once we own something—whether it’s a car or a violin, a cat or a baseball bat—we value it more than others. Let's think about it first.Why do home sellers value it more than buyers?Why do sellers of cars expect a higher price than buyers?In many transactions, why does the owner of the item ask for a higher price than the buyer wants?There is an old saying, "your ceiling is someone else's floor".If you are the owner, you are on the ceiling; if you are the buyer, you are on the floor.

Of course, there are always exceptions.For example, I have a friend who brings a case full of records to a sale just because he doesn't want to carry them around anymore.The first person who came up offered $25 (he didn't even look at the record title), and my friend accepted.That person probably resold it for 10 times the price the next day.Really, there would be no such thing as roadside antique adventures if we were always overestimating what we own. ("How much do you want to pay for this horn powder cartridge? Five dollars? Let me tell you, what you found is a national treasure!")

Putting aside this reminder of the exception, we still believe that most of the time, once something is owned, it is worth more in our minds.Is that right?Those Duke students who get tickets -- they can expect to stand in the packed stands, with players sprinting around the field.Did they value tickets more than those who didn't get them?There's only one good way to get to the answer: experiment. In this experiment, Zeif and I will buy tickets from students who have tickets and sell them to those who don't.Yes, we're going to be ticket peddlers. experiment That night we got a list of the students who got tickets and those who didn't, and we started calling.The first call was to William, a fourth-year chemistry major.William is very busy.He's been stuck in the tent for the last week, with a lot of homework to catch up and a lot of mail to answer.He was very unhappy, because he managed to get to the front of the queue, but he was unlucky, he didn't win the lottery, and he still didn't get a ticket.

"Hello, William," I said, "I know you didn't get a ticket to the Final Four." "yes." "We can sell you one." "awesome." "How much are you willing to pay?" "How about $100?" "Too little," I laughed, "You have to be taller." "150?" he countered. "I'm afraid not," I insisted. "How much can you pay at most?" William considered for a moment, "175." "And that's all?" "That's all, no more points." "Okay, we'll let you in, and we'll let you know if the price is OK." I said, "By the way, how did you figure out 175?"

William said he estimated that with $175, he could go to a sports bar to watch the game live on TV for free, drink a few beers, buy some food, and still have a lot left over to buy a few more CDs and a few pairs of shoes.Watching games is certainly exciting, but $175 is a lot of money. Our next call was to Joseph.Joseph lived in a tent for a week, and also missed his homework, but he didn't care at all-his number was drawn in the lottery, and he got a ticket.In a few days, he will be able to watch the Duke players compete for the national championship! "Hello, Joseph," I said, "we're offering you a chance—sell your tickets. How much do you want?"

"I don't have a minimum price." "Everything has a price," I replied, trying to imitate the eloquent tone of movie star Al Pacino. He opened his mouth and asked for $3,000. "Come on," I said. "That's too high. To be reasonable, you've got to bring the price down." "Okay then," he said, "2400." "Are you sure?" I asked. "I will never do it any lower." "Okay. If I can find a buyer willing to pay that price, I'll call you. By the way," I added, "how did you come up with that price?"

"Duke basketball is a huge part of my college life," he said, enthused.He went on to explain that the ball game will be a special memory of his time at Duke that he will be able to share with his son and grandson in the future. "How can this be measured by price?" he asked, "Can you put a price on this kind of memory?" In addition to William and Joseph we also called more than a hundred other students.Overall, those who didn't get a ticket were willing to pay around $170 a ticket.This price, as in William's case, is extrapolated through alternative uses of the money (such as going to the sports bar for drinks and food).Those who got tickets, on the other hand, bid around $2,400.For example, Joseph, their basis is how important this kind of personal experience is, and the memory it produces will last a lifetime. What was really surprising was that none of the sellers we called were willing to offer the tickets at a price acceptable to the buyer.What is in front of us?It was a group of fans, eager to get a ticket until the lottery; and then, all of a sudden—as soon as the lottery came out, they were divided into two groups—those who had tickets and those who didn't.What it creates is an emotional fault line between two groups of people, some looking forward to the glory of the game, and others imagining what else they can do with the money they saved on tickets.And the gap was experimentally tested—the average asking price of sellers (about $2,400) was as much as 14 times the average bid price of buyers (about $175). From a rational point of view, those with votes and those without votes should have the same view on the game.In any case, one can expect the atmosphere on the field and the enjoyment of the experience, and this expectation should not be changed by the outcome of the lottery.So how did a chance lottery suddenly and completely change the way students think about the game—and the value of tickets? Why Multiple Choices Make Us Lost on the main goal? Is Xiang Yu's "breaking the boat" irrational? Which is better, architecture or computer science? Choose to pursue your Prince Charming or reconnect with an old flame? Why are you always in a hurry when you are faced with multiple choices? Why do we hesitate to choose products? In 210 BC, a Chinese general named Xiang Yu led his troops across the Yangtze River to attack the army of the Qin Dynasty.At night, the troops camped on the shore.When everyone awoke the next morning, they were surprised to find that their ferry had been set on fire and was burning.The soldiers jumped up and prepared to fight, but they soon learned that it was Xiang Yu's order to set fire to the ship, and he also ordered the soldiers to smash all the marching pots①. Xiang Yu told his subordinates that the ferry and the rice cooker were gone, and they could only survive by defeating the enemy.Although this approach did not add much brilliance to Xiang Yu in the records of famous generals in China, it played a huge role in mobilizing his troops at that time: they held spears in hand, drew bows and set arrows, and marched forward bravely, unstoppable , Achieved a record of nine victories in nine battles, completely annihilating the main force of the Qin army. What makes Xiang Yu's story unusual is that it is completely contrary to normal human behavior.Under normal circumstances, we have to leave a way out for ourselves.In other words, if we were in Xiang Yu's army, most of us would allocate part of our troops to guard the ferry in case of defeat and retreat; Fight for ten more days and a half months; we still have to arrange for people to find straw, smash it to make paper scrolls, and prepare to draw up the surrender document after being defeated by the Qin army (although it seemed unlikely at the time). In the context of today's world, we still struggle to keep options open to ourselves.We buy extensible computer operating systems in case we need to stuff them with the latest high-tech extras; we buy insurance on plasma TVs in case they go black; we teach our kids all sorts of things— Gymnastics, piano, French, botanical gardening, and taekwondo, to discover that they may spark a spark of genius in a certain project; Once we got off the highway, the wheels were high enough not to damage the chassis. We may often fail to realize that, in either case, we are giving up something else by allowing leeway.The result is that many functions in our computers are not used at all, and the warranty cost of the sound system is high and redundant.When it comes to kids, we invest so much time with them—making them experience everything in order to find out if they might be good at something.We get so busy working on things that aren't necessarily important that we forget to work on the things that really matter.It's a fool's game, but we like to play it. The Dilemma of Choosing a Profession and a Boyfriend I saw this very clearly with one student, a very talented young man named Joe.He is about to enter his third year of college, has completed the required courses, and now needs to choose a major.But what to choose?He's obsessed with architecture—he spends some time every weekend studying Boston's computer-designed buildings that he hopes one day will be proud of.At the same time, he likes computer science, especially the wide and free development space that this field can provide.He wanted to work for a company as desirable and well paid as Google.His parents wanted him to be a computer scientist—the reason being, why go to MIT to study architecture?However, he still had a strong passion for architecture. (Having said that, MIT's architecture department is also good.) Joe said, rubbing his hands together uneasily.The curriculum of computer majors and architecture majors is completely different; the courses of computer majors include algorithms, artificial intelligence, computer system design, circuits and electronics, signal systems, computing structures, and laboratory operations of software design, etc.The courses for architecture majors are different: you need to learn the operation of architectural design studio, the foundation of visual art, the foundation of architectural technology, the foundation of computer-aided design, the foundation of architectural history and architectural theory, and other related courses in the operation of architectural design studio. How does he choose between two majors and give up one?If he started taking computer science courses, it would be very troublesome to transfer to architecture; it would be equally difficult to switch to computing after taking architecture.On the other hand, if he wants to study both majors at the same time, he may spend four years at MIT and end up not getting a degree, but he will have to study for another year (his parents pay for the tuition). finish education).But he ended up graduating with a degree in computer science, and found his first job as a perfect combination of his two interests—designing nuclear submarines for the Navy. Dana, another student of mine, had a similar problem - about two boyfriends.She recently met a boy who she wants to give her all of his love for, and hopes for a long-lasting relationship with.However, she is still dating her current boyfriend. Although the heat between the two is fading, if they work harder, they can maintain the relationship over time.It's clear that she thinks new loves are better than old ones - but she can't let go of a past relationship.At the same time, her indecision made her new boyfriend increasingly anxious. "Have you really thought it through?" I asked her, "If one day you suddenly find out that you love your current boyfriend, but it's too late, are you willing to take the risk?" She shook her head, " No." Then wept. ① What difficulties does the multitude of options create for us?Why do we have to keep so many choices for ourselves, even if these choices come at a very high price?Why can't we do things with one heart and one mind? ②